From talk on decarbonising gas to actually delivering solutions. Our reflections from Oil and Money.

Key takeaway:

This week’s major oil and gas conference highlighted the key role that decarbonised natural gas is likely to play in the energy transition. After all the talk, we outline where and how to concentrate that intent on gas decarbonisation into practical, profitable action

A thought-piece by Capterio | 940 words | Reading time: 4 minutes 42 seconds

The “Oil and Money” conference in London this week was one of the largest annual gatherings of the industry’s leadership.  Yet talk at the conference wasn’t just about “oil” or “money” … rather, a lot focussed on “gas” and “carbon”.  

Many see that natural gas has a key role in the energy transition as a bridging fuel to a carbon-free system.  Gas has (at the point of use) half the carbon intensity of coal – arguably a reason why it has seen strong growth and has been taking market share from coal. Karen Harbert, President of the American Gas Association argues that “Natural gas is no longer a transitional fuel, [it is] foundational in our energy landscape”.

But the global community is becoming increasingly sceptical of the’ ‘green’ credentials of some natural gas. 

This is because the total carbon emissions from natural gas are not only from ‘clean’ end use combustion. Significant emissions are associated with upstream operations.  Most wasteful – and most eminently solvable – are emissions from the activities of flaring, venting and leaking (Figure 1). 273 BCM natural gas is flared, vented and leaked annually. This problem literally doubles the CO2-equivalent emissions of the global gas system (which includes the oil supply chain), due to a large extent to the potency of methane emissions, as will be outlined fully in a later article.

Figure 1: All CO2-equivalent emission sources associated with natural gas

The industry already has actions underway to tackle these issues.  The largest players have committed to OGCI methane targets and the Methane Guiding Principles.  The World Bank GGFR programme has worked tirelessly to ensure that flare reduction is high on the agenda through their “Zero Routine Flaring” (ZRF) commitments.  

We fully endorse these initiatives and commitments. But Capterio is all about getting practical, and delivering with action. To do that, we use data to drive our thinking and steer our asset deployments. 

To make that statement more tangible, we’ll share some insights from the satellite observations of flares. We think that at a high-level, it tells a simple global story (Figure 2):

Figure 2: Frequency, size and source of global flares. Definitions in the body of the image.
  1. Most flaring is “continuous” in nature. This debunks a commonly-held myth that flaring mostly occurs only in “upset” conditions when equipment fails – and highlights that we have further to go to deliver on Zero Routine Flaring commitments;
  2. “Large” flares (greater than 5 million scf/d) dominate the monetisation opportunity (less than ~25% are small).  A moderately-sized large flare (say 5 million scf/day) represents a revenue opportunity of ~$15 per minute (assuming $4/ MMBTU) and a CO2-equivalent abatement opportunity of 0.4 million tonnes per year (assuming 90% combustion efficiency – see related article);
  3. Non-OECD countries really matter, accounting for ~85% of the total flaring problem.  

Breaking down the source data from OECD to country-level generates tremendous practical insight on how and where we focus on deploying our solutions and our country-level assets (Figure 3).  In particular:

  1. Significant opportunities exist in Iraq, Iran, Venezuela, Algeria and Libya. All countries have large and continuous flares (reflecting their legacy assets), which can be captured using proven solutions. Capterio is currently active developing projects in the non-sanctioned countries (learn more here);
  2. The United States’ flares are mostly small (reflecting thousands of shale oil operations), but their aggregated volume can add up to real significance. In the right circumstances, a series of medium and small flares can be tied together and monetised using modular solutions. Capterio is actively working with technology partners to deliver the right, profitable solutions in the US (learn more here).
Figure 3: Sankey chart of the volume of flared gas by size of flare, nature and country (as an alternative to presenting 40 pie charts on a page). Definitions in the body of the image.

These kinds of insights help us and our partner companies to consider our intervention strategies and technology selection when entering a country. Whilst each gas monetisation opportunity requires a bespoke solution, the data still helps to guide our global and country-level thinking on flaring.

Today, the industry is talking the right talk on flaring. Eldar Saetre (Equinor’s CEO) said at Climate Week: “Flaring is a waste and bad for the industry’s reputation … we can do something about it.” Bob Dudley (BP’s outgoing CEO) said this week: “Flaring must be tackled”. 

Now is the time for action. We believe that the oil and gas companies that respond to this challenge with results will not only yield greater returns, but also earn their right to play in a world increasingly focussed on emissions and social license to operate.

Capterio is action and solution-oriented. We deliver. We have the data, the technology and a clear case for responsible and sustainable investment (see our perspective on sustainable investing here) to capture the opportunities from flares and to monetize wasted gas.

Gas decarbonisation pays to be done, and is critical to its continued role in the energy transition.  What’s not to like?

Capterio can also help your objective to monetize wasted gas by capturing the gas and taking it to pipelines, by injecting it (for storage, enhanced recovery or disposal), by converting it to power, liquids (e.g. CNG, LPG, GTL, LNG, etc) or other creative solutions.  Capterio is a project developer which brings assets together with technologies, know-how and financing to deliver on-the-ground, real-world, safe and reliable solutions. We screen and source opportunities, we select and procure technology, we negotiate commercial contracts we provide project financing – and oversee construction and operations.  

Capterio would like to thank our technology and business partners for their input into many of the ideas in this article, and the World Bank and its partners for insightful discussions on the data.